Futures Trading Dismays Before NFP Disclosure
U.S. stocks futures inched lower on Friday as monthly-long awaited jobs data are set for release which could influence a Federal Reserve rates’ cut.
Nasdaq 100 futures and S&P 500 futures both dropped 0.2%, or 14 and 4 points respectively.
Dow futures were down by 0.1% or 29.
Data on nonfarm payrolls (NFP), set for disclosure later in the day, will likely show a June increase of 160,000 signaling a recovery from May’s 75,000.
The possible bounce-back in U.S. job growth and wage-gains pickup would probably not be sufficient in discouraging the Fed from cutting rates—considering how evident that an economic slowdown is taking place.
Along with the release of weak economic data, hopes for an interest-rollback move surfaced. Anticipations also helped the main Wall Street indexes to bag record closing bullish levels; although similar turnout cannot be seen within futures trading.
Chris Turner, global head of strategy at ING group, said, “It appears that, unless the report shows a radically lower figure (as happened in May), markets could accept a broadly solid jobs report as confirmation that the July FOMC meeting will result in only 25 basis point of easing.”
The U.S. central bank will hold its policy meeting on July 30-31 and traders expect a lowering of borrowing costs by at least a quarter point during the event. They also see a 23% chance of the reduction of 50-basis points.
A long, drawn-out Sino-U.S. trade dispute also influences the reasoning behind the Federal Reserve’s dovish stance. However, a trade truce between the two superpower countries amid a restart of trade talks last week discouraged said rate-cuts.
Stocks Down, Affected by Fed Uncertainty
Mark Dowding, Chief Investment Officer with BlueBay Asset Management, said that the political pressure to ease policy from President Trump could also make it more robust for the Fed to retain current rates’ stance.
“There is a clear sense that the risks of making a policy error, by over-stimulating demand and creating inflation, appear to be low at this juncture, therefore, it may require a jobs report adding more than 225k payrolls, plus evidence of higher wages and consumer prices, in order for the Fed to stand pat,” Dowding noted.
Volumes in the stocks and futures trading market could be standing on the edge at the end of the week as markets were closed on Thursday due to the Independence Day holiday.
Qualcomm Inc dropped 2.9% in trades before the market opened, along with Intel Corp and Advanced Micro Devices, which were trading lower as well.
Samsung Electronics Co Ltd. calculated a significant drop in Q2 operating profit caused by a supply glut and continuously rising tariffs affecting the overall demand for electronics.
Micron Technology was lower by 0.5%, and Nvidia was down 0.2%
On the flip side, Tesla edged 0.3% higher during premarket trade sessions.
BMW ADRs, which just hit a six-week high this week, were also at the center of attraction after the news that CEO Harald Kruger will step down as company leader. Reports that the board of the company had lost confidence in him were recently shown.
Amazon.com shares the spotlight after the U.K.’s Competition and Markets Authority advised the e-commerce giant to break in proceedings its integration with food delivery service Deliveroo, while it reviews whether or not to launch an investigation into a probable competition breach.
